Discusses how the concept of the Social Security Trust Fund has no basis in law and does not really exist. It is a myth put forth by U.S. politicians to allay the concerns of working Americans that their Social Security taxes are being safeguarded and properly invested for the purpose of funding future Social Security retirement and disability benefits.

Submitted:Nov 12, 2006
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In August,2004, U.S. Federal Reserve Board Chairman Alan
Greenspan recommended Social Security be "saved", once again, by
increasing FICA withholding taxes for all who work and by cutting
benefits for their current survivors and, then again in the
future, when they must be older to retire. They should live so
long. FICA taxes cannot be "sheltered" as can be the income tax.

This first happened in 1983 when President Ronald Reagan and
the Democrats, who controlled Congress, did the same thing. The
most significant cut, at that time, was in the subsidy paid to
a worker's surviving children in their pursuit of a college
education. This was actually a tax increase for the middle
class who, in the same year, also suffered additional increases
in their income taxes when most of their tax deductions were
cut as part of the Reagan "tax reform". Wealthier Americans
were compensated by having their tax rates cut and having to
pay FICA taxes on only a small part of their higher incomes.
This had the effect of increasing revenues into the U.S.
Treasuryalong withthe surplus of Social Security taxes,
presumably, paid intoa Social Security Trust Fund - a carefully
and well crafted political fiction. This was not one of Ronald
Reagan's finer moments, though I have always liked him for
serving as a strong, positive, adult male role model for both
myself (born: 1946) and then for my son (born: 1980).

The White House and the U.S. Congress, since 1935, have been
telling all working Americans that all surplus FICA revenues
are placed into and then, invested by, the Social Security
Trust Fund for the purpose of funding future benefits. This
means that all working Americans have been led to believe they
are paying for their retirement and other benefits, in advance
of receiving them. The truth is quite different. All annual
surpluses have always been taken and used to reduce the federal
budget deficit. This is the only time when the U.S. Government
"borrows" money, the deficit is reduced and the national debt
does not increase, as a result.

For example, the 1999 Clinton $150 billion budget surplus was
created entirely by the $300 billion taken from the 1999
surplus of Social Security revenues. This means that, in 1999,
the U. S. Government actually had a $150 billionbudget deficit.
The 2000 budget surplus of $450 billion was also subsidized by
another $300 billion from the 2000 surplus of Social Security
revenues. Every U.S. President, starting with FDR, has
perpetuated this myth about Social Security.

In 1983, Ronald Reagan was the 1st, with the help of the
Democrats in Congress, to ever cut benefits paid for in advance
by those expecting to receive them. Historytriedtorepeat itself
in 2005 whenGeorge W. Bushwanted to "privatize" the surplus
into individual retirement accounts.

If the annual Social Security surplus has been a constant $300
billion, then in any 10 year period $3 trillion would have to
be in the Trust Fund, if not either taken or invested. If
invested at a 6% annual rate of return, the Trust Fund would be
worth about $4 trillion for just that 10 years. But Social
Security has been operating for nearly 70 years with a surplus
produced and taken every year. Democratic Party spokesman and
commentator, Pat Caddell, said the Social Security Trust Fund
should be worth about $1 trillion. This is yet another instance
of the Democratic Party, their federally funded think-tanks and
spokespersons misleading the unsuspecting minds of most
Americans. The truth is: There is no Social Security Trust
Fund, worthy of the name, and even if it did exist, it would be
empty. This situation, when more fully understood, disgraces
the memory of all elected to federal office since 1935 when the
Social Security Act was 1st enacted.

The savings & loan scandal, between 1986 and 1992, resulted
in the loss of $800+ billion or1/3rd of allavailable working
capital and came in the aftermath of the Reagan
Administration's"reform" of federal regulations applied to the
nation's banking industry. This, in turn,helped to cause the
recession of the late 1980's and early 1990's and pales in
comparison to the wealth lost by the taking of Social
Securitysurplus monies.

Interestingly, Alan Greenspanthen wanted to increase FICA taxes
and cut future benefits, yet again, as a means to safeguard the
continued growth in the nation's economy. What about
safeguarding the Social Security system itself? By now, monies
in the Social Security Trust Fund should be $10s of trillions
and could be used to drive our expanding economy rather than
having to cite it as a hindrance. If nothing else, there would
be more Social Security recipients with more money to spend and
to invest with the result of stimulating economic growth and
providing themselves with a middle class standard of living
instead of being "squeezed out" to become part of America's new
and growing class of working poor.

Boomers (born 1946-1964) have paid into Social Security their
entire working lives with the assurance that their future
benefits were being self-funded, in advance. Now we are being
told something entirely different. What Alan Greenspanreally
suggested wasthat the working middle and lower classes must
nowget yetanother tax increase to subsidize the excessive tax
cuts recently provided to wealthy Americans. FICA revenues have
always produced a surplus and none of these "borrowed" funds
have ever been repaid. Nor will they ever be, if the White
House and the Congresshave their way. And they probably will.

Copyright � Edward J. Bradley 2006

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